The cryptocurrency market faced renewed selling pressure as a pivotal legislative effort to clarify digital asset taxation in the United States stalled. A crypto-focused amendment, championed by Senator Cynthia Lummis, was not included in the major budget bill that narrowly passed the Senate. This development injects another dose of regulatory uncertainty into the market, a factor that appeared to weigh heavily on major proof-of-stake (PoS) assets. The proposed changes aimed to simplify tax obligations for crypto users, notably by waiving capital gains taxes on transactions under $300 and, crucially, altering how rewards from staking and mining are taxed. The industry has long argued that taxing these rewards upon receipt and again upon sale constitutes unfair double taxation. The failure to advance this measure, for now, leaves the current, more burdensome tax framework in place, potentially impacting the profitability and appeal of staking activities, a cornerstone of networks like Ethereum, Solana, and Cardano.

Altcoin Weakness Amid Regulatory Setback

The market's reaction was palpable, particularly among leading altcoins. Ethereum (ETH) saw its price retreat, with the ETH/USDT pair falling approximately 3.8% to trade around $2,396. Over the preceding 24 hours, ETH reached a high of $2,498.52 before succumbing to selling pressure and hitting a low of $2,387.64. This price action suggests a rejection from the psychologically significant $2,500 resistance level. More tellingly, the ETH/BTC pair also declined by nearly 1.9% to 0.02275 BTC, indicating that Ethereum was underperforming Bitcoin. This relative weakness is a classic sign of traders rotating capital from altcoins to the perceived safety of Bitcoin during times of market uncertainty, a trend often exacerbated by negative regulatory news. The failure of the tax amendment, which would have directly benefited ETH stakers, likely contributed to this specific underperformance.

Solana and Cardano See Deeper Losses

The risk-off sentiment was even more pronounced in other large-cap PoS tokens. Solana (SOL) experienced a sharper drop, with the SOL/USDT pair tumbling over 5% to a price of $146.74. The token traded within a 24-hour range of $155.19 and $145.03, showing significant intraday volatility. Similar to Ethereum, Solana's weakness was magnified when priced against Bitcoin. The SOL/BTC pair shed a substantial 4.3%, falling to 0.0013733 BTC. This highlights a broader flight from higher-beta altcoins as traders reassess the regulatory landscape. Likewise, Cardano (ADA) saw its ADA/USDT price fall by over 5.4% to $0.5424. The failure to rationalize staking tax treatment is directly relevant to Cardano's ecosystem, and the price reflected this concern. The ADA/BTC pair also fell by over 3.1%, confirming the widespread trend of altcoin underperformance against the market leader in the face of this legislative disappointment.

Trading Implications and Forward Outlook

For traders, this legislative outcome underscores the persistent influence of U.S. regulatory developments on crypto market dynamics. The failure of the Lummis amendment is not the end of the road for crypto legislation, but it is a short-term setback that has clearly dampened sentiment. The key takeaway is the market's sensitivity, especially within the PoS ecosystem, to news related to staking and tax policy. Traders should now closely monitor key support levels for major altcoins. For ETH, the recent low around $2,388 serves as an immediate level to watch. For SOL, the $145 mark is critical support, while ADA traders will be watching the $0.536 level. The consistent underperformance of altcoins versus Bitcoin is a crucial trend to incorporate into trading strategies. Until there is greater regulatory clarity or a decisive shift in market sentiment, positions in altcoins carry elevated risk compared to Bitcoin. The budget bill now moves to the House of Representatives, where further debate is expected, ensuring that regulatory headlines will remain a primary catalyst for market volatility in the weeks ahead.